General Motors Affirms 2016 Profit And Cost Forecast

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Profit

On the profit side, GM expects to post a profit of up to $6.00 per share for calendar and fiscal 2016.

What’s more, the automaker affirmed the target of 9 to 10 percent margins on its global automotive business “by early next decade”. It also said that it expects to return excess free cash to shareholders, having increased its share repurchase program earlier.

Cost Savings

On the cost side, GM said that it expects to exceed its cost-savings target of $5.5 billion by 2018.

Through the middle of 2016, the automaker has cut costs by $3.1 billion since initiating the cost-savings measures in 2015, thereby “more than offsetting incremental investments” in the areas of engineering and technology. Those investments include over $1 billion spent on ride-sharing and vehicle automation acquisitions and technology. By 2018, GM is expecting to realize another $2.4 billion or more in savings.

The strategy includes extending the lifespan of some of its products, thereby contributing to significant cost reductions in the mid-term, while continuing an aggressive vehicle launch cadence in China, a market that generates significant sales volumes for the company and its joint venture partners in the country. In fact, GM plans to introduce 60 new or refreshed models in China by 2020.

In addition, GM has recently scaled back the involvement of its India-based operations on its new GEM small car program, in which it is investing a total of $5 billion over the coming years. Despite the reduction of focus on India for the GEM initiative, GM also affirmed plans to launch five new models in India over the next 24 months.

Meanwhile, GM said that Brexit could threaten its profitability in Europe, a division that has been struggling to make a profit for roughly a decade. In the most recent quarters, the automaker has begun to break even in the region, and plans to unveil 29 new models in Europe by 2020.